What Makes “Museum Quality” Art so Expensive?

What Makes Museum Quality Art so Expensive

A multi-million dollar economical asset or your niece’s first art class project?

Many of us have visited reputed museums and art galleries and stumbled across a piece of work that appears to be the finger painting project of a toddler. What furthers the layperson’s bewilderment in such situations is that the price tags for such pieces read millions of dollars. With prestigious auction houses, like Christie’s, delving into  NFTs and digital art, and sales continuing to fetch incredibly high sums of money, the age-old question remains the same. Why is art so expensive?

Art holds value

The concept of art is dynamic, and interpretations of an art piece are vast and varied. This makes it difficult to assign value to a piece of art. 

There are technical factors that contribute to the cost of an art piece. For one, the costs of creating and exhibiting art in prominent galleries could take a financial toll on the artist. This must be compensated by the sale of their art. 

Other factors include the size, medium and material of the piece; the age and condition of the artwork; the fame and recognition of its creator; and sometimes even previous ownership by a prominent figure or personality.

The use of a rare technique or the scarcity of a piece also adds to the value of the art. The prices of and the demands for many artworks increase significantly after the death of their creator, as there will be no more works created by the artist. After all, upon the death of the artist, supply remains limited to their surviving works. This exclusivity of the artworks further adds to the price.

As art is subjective, and each individual artwork is unique in its own right, a lot of its value also depends on its perception by the audience. Beauty is in the eye of the beholder, and so a work of art needs to be appreciated for it to have any value. The more popular the work, the more expensive it is.

Why is art a worthwhile investment?

The rich and influential have always viewed the ownership and patronage of art as a status symbol. Not only does it add to the individual’s reputation as a cultured and sophisticated member of society, but art also makes for a very convenient economic asset.

Art is a preferred asset as, despite the immense value it stores, the physical size of artworks is relatively small compared to other tangible assets, like real estate or vehicles like automobiles. It also comes with the added benefit of being significantly easier to maintain when compared to properties and vehicles, which require regular upkeep and, in turn, add additional financial responsibility for the owner.

Private collectors of art may also donate artwork to a museum or gallery and be granted a sizable tax write-off for their charitable contributions. The amount to be written off depends on the market value of the artwork determined by a professional appraiser. This allows artistic institutions to display these valuable works to the public. Being displayed in prominent galleries and institutions also adds to the value and reputation of the artwork, the artist as well as the owner, further increasing the resale price of the artwork.

Art is a long-term investment. The value of a piece of work does not often skyrocket overnight but has the potential to steadily increase owing to sale events like auctions. Art sales are a reliable way to profitably liquidate these assets in exchange for cash. 

What’s up with “Modern Art”?

While most laypersons can appreciate the beauty and aesthetic of a portrait or landscape, the abstract style of art, often confused with modern art by the average layperson, is… well, a little harder to interpret. 

The artistic significance of abstract art aside, the high price tags on these pieces can be attributed to a simple fact: there’s a demand for them. Abstract as an art style is quite diverse, and the pieces can have many facets to them. The style extends across many genres and mediums, often including multimedia pieces. The versatility of abstract art pieces gives them a widespread aesthetic appeal that has made them popular in recent years. This popularity also increases their value as assets over time.

So, is all art expensive?

The simple answer is no, but the fine art collecting landscape remains a sort of exclusive club, restricted to the upper echelons of society. As such, it can be a pricey affair. Most of the revenue in the art industry is controlled by very few individuals, institutions and artists that have had long-term prominence in the scene. 

As most exclusive art collecting clubs charge a hefty membership fee, many amateur collectors simply cannot afford it. Plus, artists hoping to carve a niche for themselves do not get far without the representation of a gallery of some prominence. This makes it difficult for new artists and galleries to break into the scene and earn a profit.

Many artists, therefore, are now delving into NFTs as they make for a viable source of income. NFTs allow artists to tokenize their artworks and sell them on NFT marketplaces, some selling for massive amounts of money. This helps artists make sales on a global level and keep the majority of their profits, without the need to pay heavy commissions to agents and galleries as proxies. Royalty clauses, which can be included in the token, ensure that the artists profit from the work even long after they have sold it. 

While art can be a multi-million dollar asset to some of the ultra-rich, many artists continue to create art in a state of penury.

Header Image Courtesy of Unsplash

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